Here’s one underreported factor that may explain Russian and Saudi Arabian willingness to turn their backs on almost 18 months of Opec oil supply cuts — the spread between Brent crude and West Texas Intermediate has reached its widest level in three years:
The simple reason for this is that the shale oil boom has left crude sloshing around the U.S., resulting in a local oversupply. While Brent prices have risen some 14 percent over the past three months, WTI is up just 7.5 percent and Midland crude — the version of WTI priced in the booming Permian basin rather than the benchmark delivery point in Cushing, Oklahoma — is down 4.8 percent.
